EL SEGUNDO, Calif.-A new study reveals that the gender gap is shrinking when it comes to financial literacy, but the lead researcher on the study said that credit unions have an important role to play in closing that gap.
Financial Finesse-a California-based financial education firm-recently released its 2011 special report on the Gender Gap in Financial Literacy. The study compiles information from the firm's clients-including Aetna, Nestle and General Mills, among others-who assessed their own financial situation during Q1. This report revisits a similar study conducted during Q1 2009.
With just a few exceptions, the study found across the board men showed better understanding of and better practices related to finances. Among the findings:
- 19% of women say they are on target to replace at least 80% of their income in retirement, vs. 12% of men who said the same.
- 65% of men say they regularly pay their credit card balances in full, as opposed to 49% of women.
- 84% of men say they have a general knowledge of stocks, bonds and mutual funds, as opposed to 64% of women.
- 80% of men say they have a handle on their cash flow so that they spend less than they make each month, as opposed to 63% of women.
Overall, the study found the largest gender gap in budgeting/cash management and knowledge and confidence about investing, while the smallest gap was in retirement preparedness (although that category received the weakest response from both genders in the 2009 and 2011 studies). Yet it also revealed disturbing signs with regard to saving: with women showing less confidence than men in investing, the study found that females are more likely to invest too conservatively, leading to lower savings growth. The report also found that women remain behind men in money-management skills, which has the potential to lead to lower savings rates.
Still, the 2011 study shows higher percentages of both men and women reporting good money-management skills, on-time bill pay and retirement contributions - among several other categories - and the gaps between the genders are closer on most items than in the 2009 study.
One of the major takeaways from the report, explained Diane Winland, a certified financial planner, CPA and Financial Finesse's lead researcher on the study, is that "although there is a gap in both knowledge and confidence levels between men and women, we see that that gap is starting to close some."
But Winland cautioned that not enough time had passed nor enough data been collected over the long term for that to be indicative of a trend.
"In general, we're seeing that women are having a little more confidence" in financial matters, said Winland, adding that media coverage of financial matters has increased during recent years, and that more financial education is being geared toward women as well, whether it be through blogs or employer-provided information.
The Widest Gaps
Yet while confidence in financial literacy is on the rise, Winland also noted that area is where the widest gaps lie in the study. She said the way to help narrow that gap "is in the area of education and guidance"-and that, she added, is where the credit union movement can play a huge role.
One strategy credit unions can implement, Winland suggested, is to examine their websites-in particular, where financial education materials are placed on those sites.
"Is it buried so far that you have to dig to find it? What's the messaging around that section, and who is it geared for?" she queried. "If it's more geared to female audiences, you might be able to attract more women to the site and increase their ability to find and understand that information."
Winland also suggested that making financial education sessions easier for members to access could pay off. For example, she said, "potentially doing some webcasts online where you're talking about personal finance; where you're reaching out to your members and talking to them in their own home, not necessarily bringing them into the branches. ... If you do it in an unbiased way where they're not looking for the hook or the sale, it helps their trust level and it helps their trust level with the institution. They'll begin to rely on that institution for the information they need to make those decisions."
